MasterCard Responds to Credit Card Fair Fee Act

Legislation Would Let Merchants Keep the Benefits of Card Acceptance But Make Consumers Pay the Price

Purchase, NY, June 04, 2009 - MasterCard said today that legislation introduced today by U.S. Rep.John Conyers (D-MI), by exempting merchants from antitrust laws, wouldtake away the fundamental protections that these laws provideconsumers. This would result in less credit availability, along withhigher prices and reduced benefits when Americans choose to use theircredit or debit cards. Antitrust laws are designed to protectcompetition and consumers, but this bill would have the opposite effect.

Conyers’ legislation, H.R. 2695, would give merchants a specialexemption from antitrust laws enabling them to engage inanticompetitive and collusive behavior when establishing the fees andterms applicable to accepting payment cards. The bill is part of anorganized merchant campaign to shift their card acceptance costs toconsumers, and does not require merchants to pass on any savings toconsumers if they succeed in lowering these fees.

When similar legislation was considered last Congress, it stirredconsiderable controversy and was only narrowly approved by a deeplydivided Judiciary Committee. In addition, a wide array of organizationsfrom non-profits to community banks and credit unions to minority smallbusinesses voiced their opposition. The Department of Justice alsoexpressed concern about the bill indicating that its antitrustexemptions “would appear to be the type of naked collusion that theantitrust laws condemn as per se unlawful because such conduct lacksplausible benefits to competition.”

Experience demonstrates that consumers lose when merchants no longerpay their fair share for the valuable benefits they receive fromaccepting payment cards. This is precisely what happened in Australiawhen the government reduced interchange fees. Although it cut costs formerchants, many Australian consumers now pay more for their paymentcards and receive less in return as a result of the government'sintervention. Furthermore, there is no evidence that merchants reducedprices for consumers as a result of the government's intervention.

Both merchants and consumers benefit from the ability to use and acceptelectronic payments, and in today’s free market system, each pays ashare of the cost of the service. The benefits and the cost of cardpayment services are now shared between merchants and consumers but themerchants behind the Conyers bill seek to retain the benefits whileshifting the costs to consumers.

Finally, MasterCard noted that any serious discussion of these issuesshould wait for the results of the Government Accountability Office(GAO) study ordered by Congress as part of the Credit CARD Act.Consumers stand to be severely damaged by government intervention andthe findings of the GAO study may help avoid consumer harm thatinevitably flows when merchants no longer pay their fair share for thebenefits they receive.


About MasterCard Worldwide
MasterCard Worldwide advances global commerce by providing a criticaleconomic link among financial institutions, businesses, cardholders andmerchants worldwide. As a franchisor, processor and advisor, MasterCarddevelops and markets payment solutions, processes approximately 21billion transactions each year, and provides industry-leading analysisand consulting services to financial-institution customers andmerchants. Powered by the MasterCard Worldwide Network and through itsfamily of brands, including MasterCard®, Maestro® and Cirrus®,MasterCard serves consumers and businesses in more than 210 countriesand territories. For more information go to www.mastercard.com.